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Issues:
1. Claim for loss due to closure of liquor shops 2. Taxability of the claimed loss as income 3. Accrual of income in relation to the claimed loss Analysis: 1. The appeal involved a claim for a loss of Rs. 9,90,000 incurred by the assessee due to the closure of liquor shops in Agra city and suburbs. The Government had ordered the closure of shops for several days, leading to restricted sales during specific hours. The Income Tax Officer (ITO) added back this loss amount to the assessee's income during the relevant accounting year. However, the Commissioner (Appeals) referred to various legal precedents and directed the deletion of the added amount from the assessee's income. 2. The department contended that the closure of shops led to the assessee filing civil suits and seeking compensation for losses, refund of license fees, and additional compensation. The revenue argued that the refund and compensation claimed by the assessee should be taxed as accrued income based on the contract with the State Government. Despite the plausibility of this argument, the tribunal did not agree with the department. It was emphasized that not every claim based on contractual obligations results in the accrual of income, citing legal cases to support this position. 3. The department relied on legal cases to support its argument regarding the taxability of claims made by the assessee. However, the tribunal distinguished the present case from the cited precedents, emphasizing that the amount claimed by the assessee had not been finalized or decided by the Government. It was deemed premature to tax the entire claim in the relevant year, and it was suggested that the department could tax any further amount received by the assessee in the future. Ultimately, the tribunal dismissed the appeal, stating that there was no merit in taxing the entire claim in the current year without a final decision on the amount claimed by the assessee.
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